Starling Discussion: Part 2

That’s definitely surprised me. I’m not sure whether Starling have a long term view here to offer mortgages or just reap the benefits of being the sole lender for these mortgages now but it’s definitely an interesting move.

I thought they may have acquired a credit card lender or something to set them off in that direction.

Interesting starting angle too, considering the passion people have against buy to let.

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For those who don’t wish to give the FT their click, Starling have acquired Fleet Mortgages for £50M.

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well, like Monzo they have a lot of unlent deposits, so I suppose aquiring an existing mortgage lender and using it to lend based on their BOE deposits is a logical and fast way to monetise those. Basically, it’s matching a bank with money to lend with a business that can lend it out.

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It’s really just a rehash of the starling press release anyway Starling Bank acquires Fleet Mortgages - Starling Bank

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I believe Monzo applied for the funding as part of the competition of Business Accounts increase funding thing, and didn’t win. A few banks have subsequently returned money, Starling gained a lot in it. It was discussed at the time that this lack of funding gain did slow the development or change it for the business accounts. So as a result, Monzo weren’t in a position for the government covid business loan scheme.

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They applied for a later round of funding. Starling applied for - and won - funding from the very first round. Monzo have been playing catch-up ever since (and the speed they could play at was slowed down as a result of not winning the funding round they did apply to).

So, as I said - and you’re essentially agreeing with and supporting what I said - Monzo were late to the starting gate, which left them out of position when later opportunities arose.

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I think there’s some validity to this, but hindsight is a great help here too. At any time there are many directions a business can go in, Monzo was focusing more on it’s premium products and US launch than Starling. Starling’s decision to focus on diversifying immediately into different UK markets was probably the more sound focus, short term, although partly that’s been proved the case by a pandemic no one could have predicted.

I think the two businesses can learn from each other. Starling have had stronger strategic leadership. But Monzo’s focus isn’t all bad, premium accounts worked well and the US launch is necessary for their long term growth plans. And fwiw I still think Monzo’s product team is better than Starlings

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Not disagreeing, but I’m curious why?

The product doesn’t seem to have evolved much in recent years except for Plus and Premium - to me anyway.

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My perception of events at the time was that it was less a result of focusing on premium products and US launch, and more down to something akin to a ‘one true Personal Account’ myopia from the top down. The evidence for being that for the first year or so, Monzo were absolutely not going to do Joint Accounts because they didn’t see the point (despite pressure from customers and would-be customers). When they did eventually backtrack and offer a Joint Account, I believe it was because they’d finally diversified their hiring enough that there was also internal pressure that was able to demonstrate they should be offered.

I suspect something similar happened with business accounts - Monzo didn’t see the point, until staff inside the business were able to say “Why aren’t we doing this?” and make a compelling case that it should be so.

To clarify what I said about it being ‘from the top down’ - I think it all goes back to Tom’s original paradigm of Monzo being a financial marketplace, so the focus was on each customer having one account and then being able to build products on to it. Having different types of account - Joint, Business - didn’t fit into that paradigm.

Granted, I’m only looking at this from the outside in, but I think it’s a fair analysis (he says, hoping no old Monzo staffers turn up to contradict him :sweat_smile: )

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Monzo was a pretty innovative app - card freezing, pots, real time transaction ledgers, business locations and info in your transaction list etc. Plus brings quite a few new things too, for a banking app.

I can’t really think of much Starling’s product team has done that’s innovative. I felt like, especially in the early days, Starling’s product strategy was to copy Monzo. Maybe I have forgotten stuff?

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I don’t think we should play who’s first with these features. Monzo were first through the gate, but Starling offered it all as part of a full bank account first. I don’t think they could’ve copied it all in the amount of time it took them to go for a full release so it’s likely both were working on things at the same time

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I think that’s fair to say. I agree this idea was a bit of a distraction, it didn’t seem fully fledged out it kind of fizzled, yet a lot of time and energy went into partnerships that never panned out and the general ‘marketplace’ idea. This is kind of what I meant by Starling have a stronger strategic leadership team too, so I guess we are in agreement.

Well anyway it’s a starling thread!

Granted, I’m only looking at this from the outside in, but I think it’s a fair analysis (he says, hoping no old Monzo staffers turn up to contradict him :sweat_smile: )

I mean who knows who is and is not an ex-Monzo staffer :zipper_mouth_face:

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I feel like if you are assessing the capability of the product teams that’s quite an important thing to consider!

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That was the beginning though, that’s been the case for years now. Sure, at the time it was amazing compared to what else was available, but more recently it seems to have slowed down.

I don’t think it’s really possible to know who did what first because some of Starlings founding team broke away to launch their own essentially identical product so whether Starling already had these innovations or Monzo thought of them is likely something that we’d never know because they’re not going to release that. Pointless guessing, really.

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Going back to the story about Starling purchasing Fleet Mortgages though, at the moment Starling are saying it’ll be kept as a separate business with it’s own team and keep it’s own brand. Do you think that should have a ‘…for now’ statement attached to it, and eventually it’ll rebrand, or will they use whatever expertise they can get out of the company to launch their own direct to consumer mortgage broker?

I’m also wondering if they’re watching Zopa closely. From what I understand, they’re providing the finance for the loans with Zopa at the moment anyway and Zopa are a direct to consumer loan and credit card ‘fintech’. Could they be waiting to see how they get on and then see about taking them over as well? Mortgages, Credit Cards and Loans are probably what’s been ‘missing’ from their portfolio?

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That would be my bet. They’ve got a pool of people they can look to for their next steps in mortgages. Fleet seem to be doing well in quite a niche area, so it might be better for them to keep that brand separate?

Zopa would be an interesting acquisition for sure. It’s a big name though - even if they are struggling it won’t come cheap!

Zopa acquisition seems unlikely - Zopa hires JPMorgan to advise on £100 million funding round

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Well starling has euro account which is actually usable, better integration to receive and send international payments with good rates and low fees from the get go. Connected account is a nice thing.

Imho these features don’t exist in monzo, and are done better than something comparable from others (be it revolut or wise).

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I updated my Starling :android: app today and still NO dark mode option yet :see_no_evil:

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